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tv   Power Lunch  CNBC  May 7, 2010 12:00pm-2:00pm EDT

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that data to try to reconstruct what happened and when and from where. if, if they find anything sinister and there is no indication that there is anything, other divisions like the sec enforcement division could be brought in. that's how the process works. the problem here is that not all trading takes place on the well-known exchanges like the nyse or the nasdaq. a lot of it did take place yesterday off market in areas that may not be as regulated and may not have as much transparency. that's where the problem is going to be, guys, in conducting this review. there's lots of trading. lots of trading in very thin markets and very thin shadowy markets and how they can reconstruct that. >> you were mentioning earlier that if someone wanted to gain the system sway, now, they might know how. >> that's the fear. that's why we're looking very closely at how this happened and how to regulate it and how to prevent it from happening again
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because if it was, in fact, we don't know, but if it was easy to gain the system yesterday. >> point out something important there. scott, ceo of the nyse and he's saying the very low trades at procter & gamble may stick. >> that's the thing. we talked so much particularly yesterday about busting trades and we don't really know if trades are bustable, particularly in equities, also in stock index futures. at the cme group they said nothing went wrong with the future's trading. >> they won't move trades. >> they won't move trades, so all of that is going to stick. >> the nyse said they stopped trading in particular stocks for 90 second. what do you say to the critics to say, wait a minute, your job is to provide liquidity and at the precise moment when we needed liquidity, you reduced liquidity and that forced people to other even less liquid exchanges and that led to the price falls. >> the argument is, i think, that the system is not uniform.
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so, you know, they stopped, others didn't. the liquidity was squeezed to different places that weren't liquid and that's what happened. >> there's a different way to look at it, right? the system isn't uniform and also two competing business models. the nyse says we'll shut everything down until we get to price and the other platforms say we'll always give you speed, right? those are legitimate arguments to have back and forth. >> and i think the argument to that is, you got to have some sort of uniformity or we'll have chaos. >> which we did. >> we did. >> that's what yesterday was. i think. at least until it all settled out. thank you, scott. >> of course, volatility is still the name of the game. the vix off its highs of the morning, but still better than 8% higher. let's get to the market action and bob pisani kicks it off for us at the new york stock exchange. >> no trades in procter & gamble will stand because they were all executed 60% from the market.
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let's take a look, it's about the euro. stop me if you heard this before, as the euro rallied, the rumor that is floating around out there, well, there is a rumor they might restart that loan facility that the ecb had earlier and expired last year. we don't have any conformation on that. our markets rally, yes, we move in lockstep with euro. germany came off of its lows, as well. remember, the markets closed about 30 minutes ago. there's an intra day of germany. take a look at the other big beta names. the biggest names that have moved the most recently all to the down side. take a look at the industrials. you can see the same thing, as well. builders and retailers also weak today. tradertalk.cnbc.com. scott, we're down 7% for the week on the nasdaq. >> a bit more settled, but quite volatile. in fact, the s&p technology index from the highs set in mid-april is down in that correction territory of 10% and
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was, in fact, below that a short time ago when the nasdaq was down about 3.5% or so. as i show you here, it's down less than 1%. you can see the dramatic comeback that technology stocks have made today, yet they are pretty weak. down 22 points for the week. apple tells a great story today. apple is down 20% and right now it was down almost 9% this morning. nokia filing patented charges or nokia suing apple over a patent infringement here. look at that wild swing in apple mid-morning or so and stock dipping down and coming back. and big cap technology here. ebay is down, microsoft is down, cisco is under some pressure by 2% and yahoo! as well. semiconductors a key space we're looking at and the semikublther index coming off its lows and then the key stock within that, clearly, intel. still down 0.7 5%. even though it remains in negative territory by just about 1%. let's head up to chicago and
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rick santelli. >> thanks, judge. let's look at the normal cast of characters. up several basis points today, but you can see over the two-day chart we haven't gotten to the point where we're negating some of yesterday's flight to safety. the boon, the boon is hovering very close to its unchanged levels. you're up almost a penny from the close i looked at around 126.20 from yesterday and the cash and maybe the craziest fx cross trade i saw yesterday was the dollar, excuse me, the euro versus the yen and right now hovering around 116 is up higher. at one point that was at 110. that's an amazing scenario and one final thought, there's a lot of talk. maybe there's going to be something like a tljp program, some kind of liquidity program in europe, but it doesn't seem to have any, i can't give you a definitive story, but this is the kind of talk that we're picking up going into the weekend.
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michelle, back to you. >> we thought maybe we might hear some of that yesterday, but we didn't. thank you. european shares finishing the week at six-month lows. u.s. shares having trouble finding their footing again today despite the strong data. joining us is michael farr and cnbc contributor and from the cme, jeff carter from poin pointsandfigures.com. what do you say to the individual who's looking at this and, regardless of what they decide about what happened, it's pretty frightening to see 1,000-point move yesterday. >> no question about it. that's really got to give you pause. even if it was caused by some sort of fat finger keyboard glitch. 1,000 points is a 1,000 points and that translates into real dollars. cooler heads prevailed by the end of the day and we saw that 350-point selloff followed by a lot of volatility today.
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i think we shouldn't miss the point that we have seen the market trading lower and it was in for a lower day yesterday at 225 in the afternoon until 246 in the afternoon. we saw 2 1 minutes of a 750-point drop. that was harrowing. but we should -- the tradeoff in here and the pull back in the markets have been kind of normal and lots of have been expecting it. >> the trust factor from the individual investor standpoint. the issues in europe have not gone away and probably won't go away for a while. we don't know how how much they are going to spread into the u.s. market. our corporate bond market is a mess once again today and the credit market in many sectors are seeing a flight to quality. the individual investor doesn't know whether they can get into this market and pull the trigger on buying a stock or whether or not some electronic box somewhere is going to override what they want to do. >> yeah, i think. and the markets that you cited
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incredibly are the darkest, most n nontransparent markets in the financial system when you talk about corporate bonds, muni bonds and sec-regulated stock markets. what happened yesterday and, you know, you've talked about it all day was the volume in the stock side is extremely fragmented. it goes into dark pools and it's internalized into back offices and payment for overflow and the new york stock exchange and the nasdaq do very little in the volume. totally different on the future's side where here we clear our own stuff and we didn't have a blip. so, markets here are working. markets there didn't work because the liquidity is so fragmented against so many different places. >> why should the individual investor put a toe back into this market? i mean, i covered 1987 and i remember the pit in my stomach when the market fell apart. yesterday i felt that same
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feeling. >> i think some good could come of this. the last two times i was on the show i said the market is underrating sovereign risk and now it's back on the table. so much harder to bail out countries than companies because it requires behavior change. the difference this time we had pictures. people looked on the streets in greece and said, does it look that anybody wants to take less? the greece would say in their press, it's a double standard. all these rating agencies. take a look at california and why don't you apply the same standard there. both are in denial. but in the u.s. we have more options. >> michael, pick up on that point because as we focus between what happened between 2:40 and 2:50 yesterday it is very easy as we think of that sort of liquidity hiccup or hair ball that was in various marketplaces around the world, around the country, i should say. easier to lose sight of the fact that what was really driving so much of yesterday was sovereign debt fear and the idea that that was going to metastasize across
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the globe and maybe come here. talk to me about that and how that should influence my investing over the next 12 months. >> well, tyler, i think that part of what we saw yesterday kind of made sense because we were watching your air and we were watching those live riots in greece and watching the riot police surge forward as carl quintanilla was covering it live. that was pretty intimidating. i think, clearly, when you think about the v-shape recovery that i don't believe in that larry kudlow is talking a lot about, we're seeing here there are big problems in europe and if they're going to have real austerity to repair their balance sheets, it's going to slow global growth and slow global recovery. at 11% deficit in the u.s. we'll think about austerity measures, as well. i think we have to lower our expectations of big gains. >> craig columbus, angela merkel the german chancellor has just
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said "european leaders must act fast to maintain the greek crisises." now you tell me and they haven't and they haven't acted fast. are you convinced they can do it now? >> is this an intra bank lending problem? when they're facing each other, a lot like subprime issues. the only way they're borrowing through the facility and their deposits are fleeing these banks. at the end of the day, i think we will have to see the quantitative easing and secondary market purchases is coming. >> guys, you frighten me when you say that. when you talk about a reduction, it brings back all those horrendouses memories of 2008. >> the banks didn't want to do business. >> that's what's going on, isn't it, jeff? >> that's exactly what's going on over there and a replication of what happened here in 2008. their credit market is exactly frozen up and they're not lending to each other and the ecb has to come to a rescue. they have to make a decision and the only way to do it is flood the market with cash, just like our fed did last year and you'll
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see a monetary quantitative ease and the politicians have to quit yelling at the speculators in europe. >> you know what, rick santelli, there is a political unwillingness to do that. we've seen that already. we have seen that, the only thing that people want right now is dollars. the bank of japan moving in the market overnight was, i mean, it was stunning the move that they made in the market overnight to look for dollars. talk to me about the value of the u.s. dollar in all of this and whether or not, telephonerarily, it has moved too far, too fast. >> well, i think, yes, the answer would be yes. but that doesn't mean it can't move farther and just as fast and i think ms. merkel's comment, yes, once again, we need something. and i would like to throw in one more thing and i can't believe nobody's said it. not to belabor the fat finger hit, but jeff carter is on now, jeff, what is the biggest size order you can put in on, what is
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the biggest order you can input on a keyboard? it's 2,000 contracts. so, once and for all, these people that have this magic m l milli million, billion button, i don't know what planet this came from. but the fact is you cannot put in an order on the eminis that is larger than 2,000 contracts at one time. >> don't you think that's because they don't know what the answer is, jeff or rick? >> no, there's another point that rick brings up. a lot of people, all these electronic systems have a screen that comes up that says, are you sure you want to enter this order and you click it and it goes in. but they probably disabled that. you can also, in your own restrictions put how many contracts that you want to do. >> they, obviously, disabled that. >> the group has a limit. >> can i remind everybody that the most liquid market in the world and the most unregulated market in the world with no
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clearing whatsoever is the currency market. am i right? there's no worries about insider trading and that works out fine all the time. more regulation and more of this and more of that. give me a break. >> different markets are very different and i don't think you can compare the fx market to the listed equity markt to the futures market. i think they all have different purposes and exist for totally different reasons and i think they need a different type of regulation across markets. not one size fits all. >> one point that is really important here, 1987 when i was also at my desk watching the market, we put in trading stops on the new york stock exchange when we saw these program trades and the power and the destructive power they could wreak and now i think we have so many different markets trading so many securities there has to be some way the trading stops could come back in. they serve a purpose. >> thank you, all, very much. we've just gotten started on this day. there are so many places we're
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going to go with this. stay with us because we have the entire cnbc team tracking the whip saw in the market around the world literally tick by tick. straight ahead, the fed's take on the continuing turmoil in greece and also the contagion. while we were all reeling from that 1,000-point case of whip lash, other tradeables like dwoeld and currencies were passing over and around key technical levels. walks us through on all for what it means next week. goldman sachs holding its shareholder meeting at this hour. as soon as it is done, lloyd blankfein will sit down with our david faber for a special one-on-one interview.
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i'm sharon epperson. another record volume day here at the new york mercantile exchange. here in the pit behind me we have seen 400 lots traded already this morning and, again, it's only a little after noon time. we did see a record volume day. it appears in the june contract yesterday nearly two-thirds of the average daily volume and all the options that were traded in april and that was a record month. keep in mind as we're looking at the volatility today, we did see oil prices drop below $75 a barrel and below that now trading closer to 7 $6 and we lost more than 10% this week. just think that $80 a barrel used to be the support that we were seeing in oil prices at the
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beginning of the week. now, it looks like it's going it be the resisten. also gold over the 1,200 level and, sue, back to you. >> thank you so much, sharon. well, france, italy and portugal approving their share of the $140 billion greek bailout as european leaders scramble to ease fear over contagion. carl quintanilla is in athens with more on what's happening on the ground there. hi, carl. >> hey, sue. one of the nice things about being in athens this crazy market week is finally over, at least here locally where it's about 7:15 athens time. obviously, this crazy week coming to an end and the greeks are happy to have the spotlight at least share would the jobs report where you are and the continuing debate of the trades. you mention germany, spain and we'll see now as those euro
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leaders get together in brussels and try to finalize this deal and give us short-term fuinality on what may happen with greece. we're hearing this notion that maybe the ecb, which, of course, had a lot of criticism this week, may be reversing some of the lending facilities that they let expire at the end of last year giving some of the euro zone banks borrow at a cheap rate and recapitalize their sheets. they haven't been strong enough, not aggressive enough and haven't learned enough from the fed and haven't adopted enough of those acronms that steve liesman talks about all the time. speaking of steve liesman, we want to get to him, he's back home at headquarters. >> carl, thanks very much. the greek crisis and the chaos what they do best. prompting a series of meetings and conference calls among high-level officials. president obama has spoken with world leaders while tim geithner have held several calls in the past couple days.
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geithner holding a call this morning and senior administration official telling cnbc that the u.s. view after the call is that europe has an appreciation for what the challenges and the options are. that's a potential reference to other actions to european central bank could take which market participants believe won collateralized loans but be careful the official would not speculate on what those actions would be. the official did say that geithner in that call underscored his long-standing view for the need of decisive actions to deal with greece. despite all the global talk, any immediate action would come from the united states. officials say they have prodded europe to act more forcefully in the past several weeks and europeans to deal with the undercapitalization in their banks. now, a lot of speculation in markets about dollar swap lines. these are accounts at the federal reserve where the europeans put euros and we give them dollars in return. these swap lines created by b
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between the fed have been closed but the fed left the archit architecture in place so they could be open relatively quickly. some expectation in markets that this is one possible solution, but while there's reluctance on the part of european banks to lend to each other, no sign right now that the yoeuropeans requested the swap lines where that would fix any of their problems. >> the problem is their banks don't trust each other. how do you reverse that? they've waited so long for any policy move. >> you fix that with liqu liquidification of the business. a dollar swap line would fix it and also the belief among u.s. officials that europeans have many things they could do before coming to the fed and saying, reopen that swap line. they could do some of the things we talk about with qe that could solve the liquidity problem where before during the financial crisis there was a dollar deficit in the system and a need to liquefy that overseas.
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>> that was one country with basically the same cultural issues, the european union is a completely different set of issues and they all are working for their own, to maintain their own financial stability and all of their interests are very different. >> but, still, won't they all be different in quantitative easing and ease assets that nobody would buy from each uthper. >> injecting more capital from the system. again, on this issue of swap lines it's not clear to me that that is the solution. qe is what many people think is the solution. i know a lot of rumors in the markets -- >> helicopter cliche. >> to sue's point about culture, germans still have a huge fear of inflation, more so than other people, right? >> let's draw your attention now, however, to the dow which has been really wobbling. just a few seconds ago it was down just 6 and now down 3 1. about three minutes ago it was down 60. so, just keep your eye on the dow because it is, obviously, a
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day of wobbles. up next, chart watchers. they've got the wobbles, as well, from this week's whip saw market action. but what are the charts telling us about where the markets are headed next. we'll read the tea leaves. ask her, what do you do with those questionable trades when you look at a chart. do you include them or don't you? on the other side of the break.
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a lot of deindecision in the market today about where it is heading following yesterday's big correction. a dramatic day, but should we count the huge, what some are calling a technical glitch in the middle of the day. let's read the tea leaves with managing director. good to see you again, louise. >> thank you for inviting me. >> michelle wants to know about counting those trades. i want to know when you look at the chart in the dow specifically, what is it telling you about what comes next? what are we looking at next and
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how does the chart look to you? >> let's deal with the so-called mechanical error that occurred yesterday. since nobody is quite sure how authentic it was, there's an old, i think it was jimmy dimes who had the quu locleallism that yesterday began weak and even by 11:30 the market was down and breaking short-term support levels, we could probably put our finger over the tail and perhaps accept the level from which the market closed. s as the point of the full decline for yesterday. i think that that might be a fairer way to do it. there are a lot of uncertaintieses as to how and what was going on. we've even heard that on the new york stock exchange the specialist held the bid at a more appropriate level, if you will. and that reminds me a little bit about when the berlin wall went down and russia said, you're going to miss us. you're going to miss us in the future and the specialists can
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now probably say, you're going to miss us. >> you're going to put your thumb over that spot and basically ignore it. what does the chart tell you? >> the chart tells you we have broken the uptrend from the november low and you're starting to break short-term support levels. what has been interesting about this particular rally, even as opposed to the one in january is that a lot of the indicators did not falter into oversold levels, which is where we consider the risk until yesterday. and that's very significant in the sense that there wasn't a lot of forewarning. but if we consider the overall view, which is ours, at least that this is a cyclical bull within a structural bear, that bear claw could come out at any time and we have had the history, 1937, 2007, 1939 to 1941 and even 1977 was in the
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throws of a structural bear market where the forewarnings technically have not been as strong as they can be or should be. >> louise, talk to me about gold. where do you see it going long and short term? >> we have not shaken that view at all. it came out of the 18-month consolidation through 1,1032. what has happened over the past few months is nothing more than a normal consolidation. we will be looking for gold to continue to rise. you're almost through the peak at 1226 and we have outstanding targets at 1350 and 1500. on the way even to higher levels. i think that one has to recognize with what's going on in the world that gold is already at high levels versuses the pound, versus the euro and versus the yen and even versus
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the swiss frank. so, the other thing that's very interesting is -- >> very quickly, louise. >> the dollar and gold have been rising at the same time. that is a very unusual event. the dollar represents the flight to the least worst currency and gold is representing what it has right along here, a continued store value. >> thanks, good it see you again. >> my pleasure. straight ahead, yesterday's route hit safe havens like corporate bonds pretty hard. what now? we'll take a look at that critical sector. coming up at 12:45, melissa lee and the fast money halftime report.
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welcome back. almost halfway through the trading day in the headlines at this hour despite debt woes, spain is officially out of recession. the bank of spain said the country's gdp is now 0.1% had been in recession for the previous six quarters. according to an sec filing,
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hospital chain hca is planning to raise $4.6 billion in initial public offering and consumer reports lifting their don't buy recommendation for the lexus gx460 after they passed another handling test following a dealer-installed software update. tyler? the sec and the cftc saying they're conducting a review of yesterday's spine chilling slide on the street. and here with his insights is harvey pitt, the former sec chairman, as well as the ceo and founder of calarama partners. mr. pitt, welcome back. nice to see you. >> always nice to be with you. >> thank you. what your instincts tell you about what happened yesterday in that period between 2:30 and 3:00 p.m. specifically, do you suspect that somebody did this intentionally and not by mistake? >> i think we're seeing an awful lot of panic and uncertainty in
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the marketplace and a high degree of volatility. one of the things i was most impressed with is that the sec jumped on this issue immediately and chairman shapiro put out a statement saying that she and the cftc were organizing an immediate investigation, which is a good sign that the sec has got renewed vigor and is on top of this. but, eventually, the real issue is what can you do about market fluctuations, particularly ones that are as wide-ranging as this one. there is a lot of uncertainty about the economy and even though there more jobs now, the unemployment level rose. you've got greece, you've got the bp scandal -- >> we understand all that, but back to the spirit of tyler's question, do you have any sense of what happened yesterday?
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>> i'm sorry? >> does the spirit of tyler's question, what does your gut tell you about why what happened yesterday actually happened? >> well, i think that you've got a lot of program trading. i think you've got a lot of people who pulled out of the markets precipitously because they were no longer certain that the market was going to move in an orderly fashion. when people make that decision, it's almost impossible for government regulators to try and step in that flow. the real issue is, what is motivating people to pull out of the market and how do we get the markets back to a stable progression or descent of prices instead of the wild swings we're seeing? >> harvey, there are those out there, though, who feel that because of the complexion of the trade yesterday and the whip-saw
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like nature that it caused in the market that someone or some people have found out how to game the system and manipulate the system with electronic trading programs and that they found a way to get around legitimate electronic trading. >> well, i'll tell you. that is clearly a possibility and if there are people gaming the system and contributing through their own activities to the market's wild swings, then i think the sec and the cftc will take substantial steps to prevent that from occurring. but the key question is, were people just retreating from the marketplace? which is certainly what a number of investors did. or were people gaming the system
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and that i assume is going to be the first line of inquiry for the sec. >> so, should all the exchanges have the same rules in terms of no slow down in trading when you get trades or should they be allowed to have different systems like those between the nyse and some of the other exchanges? >> well, i think we're in an era where technology is going to make it impossible to slow down all trading. what i think the concern is, is whether some people have an advantage over others or can unu undooley influence the way the trading is going on. if that is the case, that has to be stopped and stopped immediately. but the mere fact that people may not continue to participate in markets they don't trust is not something that the government has any ability to
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control nor should it. >> thank you, mr. pitt. it really comes down, you have two business models. the nyse says they'll help you find the best price and some people just want speed and they're going to go somewhere else and they have to accept maybe a worst price as a result. >> what is it? one-fifth of the trades crossed on the new york stock exchange. it is a small and dwindling percentage. still ahead, markets, markets, markets, the head u.s. equity strategist. they'll tell you how they're playing the wild markets right now. plus, the big question, how do we prevent another fiasco like yesterday? do we need more coordination? we'll talk about all of that. but up next, melissa lee and the gang with the fast money halftime report. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars
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welcome to the fast money halftime report. stocks attempting to push into positive territory and seeing selling pressure, once again in a whip saw morning to say the least. fast money for today joe, steve grasso, stewart frankel and jerry and cnbc contributing editor. we have to start before we get to the overall markets. the shareholder meeting just wrapping up and they have rejected a proposal to split the
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chairman and ceo role. gary, i want to ask you this question because you have been on the band wagon in terms of lloyd blankfein perhaps being the door at some point, what does this mean in terms of that prediction? >> i don't think that vote has anything to do with what i think is happening. not necessarily being shown the door. i think goldman sachs has to get back to what goldman sachs is about. it's about the institution is bigger than any individual and what has happened in the last several months is the firm has become too associated with lloyd as an individual. so, i continue to believe that you'll see a new change, new change in leadership and it will come from the banking side of the business despite you have proprietary trading. >> district, though, removes a third scenario and makes it a more situation. llo lloyd blank fine will either be the chairman or ceo or hold on to both positions or be out.
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>> i think you're going to clean house with some sort of settlement and have new management. >> joe, i want to get to you. goldman sachs is talking to the sec about a settlement and that stock has been showing some strength in a relatively down market. do you think we have seen the bottom in goldman sachs at this point? >> if the market continues to rollover, goldman could see some pressure towards 135, 1 40. once financial regulation is passed, that is when you buy goldman sachs. a settlement in goldman sachs is bullish and a settlement in goldman sachs clearly has a management change in it. >> after a day like yesterday, we got to get to what is the feel on the floor of the stock exchange. grasso? >> it's cloudy. i would say yesterday we saw the bottom fall out. but if you looked at the charts yesterday when we talked about it on halftime report, we looked at the s&p.
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the real down move should be to the 1120 level. that is where it happened before the bottom really fell out. that's what we're doing to get back to there. this is the technical base where we should be. >> obviously, you know, dennis on fast money said as a trader markets like this, you want to get small, especially ahead of the weekend. let's also look at the intra day chart of the euro. we saw the euro actually break higher, that chart was sort of telling you something, zachary. something was in the works perhaps over the weekend. liquidity facility. whatever you want to have it. the chart is telling us, people want to cover their shorts at this point. >> rumor some sort of liquidity injection and i took the bearish sentiment in the professional trading world yesterday, which probably bearish is a much too mellow word for what people were experiencing in terms of sentiment yesterday. as a sign that, you know, this may be a market you want to be
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more in than out. we were looking for a correction, no doubt. we have almost gotten a 10% correction. we certainly could get one next week. that's a separate issue to whatever went on yesterday and i think the bearish sentiment compound a normal correction and i'm looking to get back in. >> melissa, you have to look at that 1095 level. remember, we spoke about it yesterday at the 5:00 p.m. show that the technicians will want to test that halfway move and they did today. it remains to be seen if they test it again. right now, remember what pete always says about monday. mutual fund monday and bailout over the weekend, you could see a pop in a rally on monday. is it a long-term event? maybe not. last few days result in the s&p 500 breaking 150-day moving average and right now we're aroaching the 200-day moving average. zacky is in the bullish camp, but seeing this chart and giving your predictions yesterday, we'll see more pain to come.
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is that what we're expecting on monday, even with mutual fund monday coming? >> mutual fund monday, whether it was a fat it was a fact thing or a computer edge, what started yesterday in action was the problems in europe and whether there was a systemic. whether you believe europe's problems will hit the united states or not will be the discussion people will have for the next two or three weeks. remember, too, europe is about to hit their seasonally slow period, so april and may is typically an active period for business which has been clouded by what's happening. you're going to have that seasonally slow period. any injection of european problems into the united states economy will be bad. >> right, you're not facing european problems into the united states, it's forced selling on institutions to balance their balance sheets. if you have anything going on around markets that pushes prices down and adds to a correction, to me that's a time
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you really start getting back in, because things are being artificially depressed by an external event. >> at the same time, steve grasso, you're making the point that some of the pms are making an impact on the companies, an impact on the head wind by currency. >> it's been developing the last couple days and it's really magnified on a day like today. if you look at hershey to general mills, hershey is down. look at dr. pepper, dps, compared to pepsi or coke. dr. pepper is going to be up, pepsi or coke are going to be sold off at the end of the day and they've been sold off the last two days. >> remember, a lot of companies out there rode the weaker dollar to better earnings, so when the dollar is stronger, you're going to see the impact somehow. let's move on to the markets. we've got the nasdaq down a full percent while the other markets
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are down by a fraction of a percent. i know it may not be palatable to people out there to think of buying, but what is on your watch list? you see a big pullback in technology. you see apple down 8% on the week, and you've got to think there are names on the radar screen at levels where you think the fundamental justifies you stepping in. >> technology spaces where you want to be. my shopping list is sitting on my desk. i'm not going out to the store to buy anything right now. the momentum has clearly shifted right now, and if you look at the price action today, again, it is all being driven by quantitative models that probably drive the market higher at the end of today. going forward, is it time to step in and buy this stuff? no, i don't think so. you may want to, but you have to be patient. >> you're the one who said you might be stepping in, so are there any names on the watch list for you, and give us the levels as well. something like gotsero switches a wireless play -- i think
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othero was down 20% the last eight or nine days. i owned for a while and i certainly sold a little before it dropped as much. i agree with joe, i'm not as ready to jump back into some of these names except purely as kind of a bounce-back trade but that would be the only one i'm looking at. >> we have to follow the scrutiny today after yesterday. a 3% decline today. let's bring in richard repetto, who is an expert in the trade of stock. it seems we go with the slow mo, and then nasdaq says you're removing the liquidity so these moves are more. where do you think these moves will follow? >> i think there's a little bit of truth to both arguments.
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i very much disagree with former chairman pitt who was on before you. there is a way to slow down the markets and they can be coordinated. i think that was a problem yesterday. >> will we actually see regulations come in to slow the markets down, do you think, and what sort of impact would that have on the nasdaq because the market and the stock reaction is telling us this would be a negative impact. >> exactly. i think people are jumping to that conclusion. i think if there is a controlled response, and, believe me, we are on the risk these days of overresponding by legislators and regulators, but if there is a control response that these -- the slowing down of trading is only done in these dramatic situations like we had yesterday. i think there is very little impact. but the risk they use as a banner -- when i say "they," the legislators to make more aggressive restrictions on trading, that can potentially hurt the exchange. >> it's a bottom line, immediate headline rift, so you think nothing will get done so the
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fundamental business model will not change. >> as long as legislators and regulators use restraint and i illegibility. we set our sights on the aftermath. did anyone see it coming? >> an sec move in the works. that's tonight on cnbc.
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welcome back to halftime report. zach, i think i know where you
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stand, but go ahead and tell us. >> i'm a buyer, but to be honest, i'm also a seller in this. you work both sides. i think this will be a good week to get back in. >> grasso? >> no reason to be a hero on a friday. just got to hold that 1095 level on the s&p. >> joe. >> the unfortunate element today is that the computers are driving the direction. >> gary? >> as i said last night, you want to stay small. if you watched the show last night, you heard what mark fisher said. this is not the end of something, this is the beginning of much volatility. >> be sure to catch "fast money" tonight followed by "fast action." the chief strategists from ubs and bank of america, merrill lynch, will join us with some money-making ways to ride out this market volatility. also ahead, budget versus technology. how do you keep yesterday's trading dilemma from happening
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to you again? after a wild week on wall street, what are the best moves for you? "triple play" starts right now. >> indeed that second hour does start right now. welcome, everybody. i'm tyler math son. volatility reins supreme. the dow wipes out 279 points of losses today, but where are we right now? we're down 83.5 points falling back in the red recliners, beating it 2-1. >> pitt speaking out on yesterday's market sell-off, saying the agency he used to head is doing its job. >> shareholders at goldman sachs' annual meeting rejecting the proposal to split the chairman and ceo roles. the stock in a very weak market. goldman sachs is higher. buy more than 1%. right after that meeting was over, gold man and ce, loid
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blankfein will sit down with david favor for a special one-on-one interview. >> we have greece laying on the markets once again a day after that big, huge sell-off, however momentary it actually was. take a look at the dow the past few days. how do you ride out this volatility? let's bring in some experts, including david bianco, merrill lynch, global research, and that's a long title there, david -- jeremy zerin, chief equity status, and dr. doug ershorn, trading coach at drdoug.com. i assume that's "great". >> eight ways to great. >> eight ways to great. are people as scared as we think they are? >> oh, yeah. and they should be. the fear was triggered and it
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cascades so trades are skittish. they're across the board, nobody really trusts what's going on. and you see the video. it's real life people, and the slightest little crack caused a deluge of fear. >> computers are skittissuh, to. >> they're skittish, and they react to fear. >> there have been very few safe havens. the gold market had a safe status to it, but we've had people on "power lunch" and elsewhere say protect your interests, move into the investment grade bond market. but if you see what happened to the investment grade bond market the last few days, it was a route. that also obviously under mines confidence, right? >> it doesn't undermine confidence. when you have a steep decline, all risk assets seem to sell off. diversification only helps you
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so much when those sell-offis occur. there is something to keep in mind. we see the u.s. dollar and we see u.s. treasury bonds still in an area where people flee for safety. that is damages until the earnings outlook, but it would be a much more serious situation if they lost money in the gold bond market. one thing to keep in mind, the gold bond, that's still occurring, and that means the u.s. does not have the problems di -- >> the death of the dollar was greatly exexaggerated. but speak to me about the corporate debt in the united states. it came in this morning after we heard that there may be a line of credit for some of the banks, but it widened out dramatically and that's not a good sign. to me it's a dangerous sign of more to come in the investment grade market.
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>> it's reflected given the volatility we saw yesterday between 2:30 and 2:45 and just the decline we've seen in the risk of appetite over the past week or so. i think if you look at the corporate bond market, what you see is that u.s. corporate balance sheets are still in very good shape. we're in the process of an economic, and more importantly, a very robust corporate report profit recovery. we've seen a very sharp move in credit spreads and equity markets as well over the past 14 months, so it's not overly surprising to see some of that give back. >> anything within the last 24 hours that makes you say you've got to do something differently here right now? >> for me to do something differently, actually, i think this sell-off is an opportunity to act upon what's mostly our existing strategy. play the u.s. recovery. i feel more confident about the u.s. recovery because, as we were discussing before, the silver lining here is low u.s. interest rates as investors go
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widely for safety. that supports the housing market. that's an important thing. i'm still encouraged by global growth, particularly the global growth opportunities by many industrial technology, stable companies that s&p has where jerry says the balance truly is strong, and they're republicly indicating their models abroad. >> trading coach doug, can you coach for what happened yesterday? >> absolutely. here's what goes on in the trader's mind. there are two different sets of fear. fear and fear drives market. people don't understand that. it's the fear of losing money, but now what kicks in is a fear of not making money, not capitalizing opportunities. so they're keeping what they call a dry pallet -- pallette on the sideline. >> are we getting to the point where there is actually opportunity to put money to work in some of the lesser exposed economies or sectors of the european stock market?
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>> on the house, we are bullish on the european stock market. we recognize there is uncertainty in europe. they also have a linkage to the market, so i say to investors look at the non-financials in europe. >> european exporting companies is basically what you're talking about here, right? >> that's right. european exporters, they're going to benefit from their weaker currency, and the key thing to realize here is southern europe is going to have lots of pressures owing to austerity. europe, northern europe might pick up steam going into the weekend. >> jeremy, your assessment of opportunity in europe and whether if we see this big sell-off is actually, as tyler pointed out, it's time to buy. >> i agree with david's point to a degree that we will see the more fiscally strong countries and places like germany should benefit from the stronger euro. i think it's too early to jump
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into european equities here. i think we would enjoy the emerging where you have structural growth within those areas and valuations have come back and that area has really lagged here today, so we think the best combination, valuation, fundamentals in terms of the risk of financing conditions not decreasing is in the emerging market area. >> david, the thing that worries me, though, about europe is the lack of political will to actually address the problem on a broad basis. i can totally understand what you're saying about northern europe, but at the same time, there is a lack of political will to solve this, and we have some of the banks in europe trading at levels that are worse than when lehman was taken out, worse than when bear was taken out. it smells like '08 over there. >> the ecb has a reputation for fighting inflation. the ecb has to be willing to take actions to fight panic. i think there are some
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slownesses in their responsiveness that make investors fear if things get worse they might not be ahead of the curve. so there are contagion risks. but that said, i think you still have good opportunities in europe and my focus is on the u.s. equity market, and as jeremy said, there are great ways to play what's going on in asia, and recognizing that asia is probably later in its economic cycle, so you want to play it with things like u.s. technology companies and u.s. and european industrial companies. >> david, thank you very much. doug, thanks to you and to jeremy as well. >> let's get to our market reporters. begin with bob posani down at the new york stock exchange. bob? >> pretty simple here. the euro and the dollar. the euro moved down to the lows today. that was about 10:30 eastern time. our stock market moved to the lows as the euro moved to the highs of the afternoon, the early afternoon, our markets moved to the highs. take a look at the s&p 500, you can see we're moving very much in lock step with that exact
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relationship here. europe and the rest of germany, the rest of europe ended off of their loads as well. take a look at some of the big beta stocks that are out there, your retailers, your home builders, your industrials, all these stocks have been down today but they're off their lows and the volume is not quite as strong as some people thought. there was a lot of talk of continuing deleveraging this morning. we're still continuing on the down side, but again, you can't see the value numbers. they're not quite as strong as some people anticipated. trad traderstock.com. we're a little further down on the nasdaq. >> the market opened with a modest loss and then it accelerated a little bit -- excuse me there, i was hearing something in my ear. meantime, the nasdaq is down 1.23%. nokia has sued for patent
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infringement. shares were down as much as 9%. you can see that big dip i'm talking about late morning or so and shares have come back a bit. still down 3-3/4%. technology has clearly led this market lower today. they did come back briefly, however, taking another turn down. your index down another percent. index is obviously intel down 1.5%. >> as investors are selling stock, selling crude oil, where is the value? of course it is in the gold market and that's why we're seeing gold prices here near that five-month high, and of course at the highest levels of the session here, we have just a few minutes to go in this floor session. we are looking at prices that seem to be driven by this flight to quality, flight to safety and we were looking at this rise in gold in spite of the fact that we've also seen gains in the dollar this week. that doesn't normally happen,
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but as we pointed out, they are looking at the least amount of currency and a store in value and that's why they're buying gold. we've noticed this week that we've seen euro fall and gold prices in the pound at record levels. that is significant and that is the currency play. tyler, over to you. >> in times square, our brian shackman is on the scene. brian? >> in times square, there is a suspicious packaging right near the marriott marquee. you see police on horses. everything is hypersensitive, of course, after what happened on saturday. i can tell you, though, we have been down here covering the nasdaq and other things over the last couple years. this has happened before. we're on heightened alert. nobody is being allowed through, i think, 47th and all the way over to 43rd. maybe scott can get more on that because i'm at the opposite end.
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i have been told a suspicious package. they're taking specific precaution. we don't know how legitimate a threat it is, but in light of what happened last saturday, they're not taking any chances. >> are they evacuating the area, brian? i see lots of people down there, just moving people away from the immediate area where that suspicious package may be. >> right. that's 47th avenue, and they're not making people go further, but i will tell you i went to the other side of the street heading toward 46th and they told people to get back further. in terms of how i would read the police officers, it's not the most intense of all senses of urgency, but nobody being told to go through there right now. >> we're looking south, aren't we, from one of the aerial cameras, and it looks like the main sort of street fair in the 45th street area is carrying no pedestrian traffic, so it does look pretty well cleaned out there, brian. >> there's no doubt it's one of the pedestrian areas that mayor bloom berg cleared out so there wouldn't anybody cars.
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>> there's no people even walking. >> right. i don't know. i had one person go by who said, lir listen, i have a lunch with 500 people, i have to go back to it. they wouldn't let him go in, but they didn't say the lunch has been cleared out. i don't think the people in the buildings have been evacuated, but i don't have confirmation on that. >> lunch can wait. the dow industrials, trading down 135 points, and it has been one of those days where volatility has been back in full force. >> those are the session. close to it, certainly. we'll be watching that. we'll also be watching where some of that money is going, because as rick santelli has been telling us, they've been getting lots of action. >> i saw we were down 180 earlier. that's why i was a little thrown there, but i got to get my chart reading.
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down 270, beg your pardon. coming up next, two men are going to weigh in on the markets, the core equity team and barry james of the james management fund. we're just minutes away from the one-on-one interview with goldman sachs ceo and chairman, lloyd blankfein.
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. despite the dow's precip tus rise and fall, our next two guests kept a sure and steady hand on their funds, each realizing a less than 1% loss in net value yesterday, but the question is, what do you do from here? do you jump back in, do you sit on the sidelines? james balance funds. we were looking for the pot of rainbow at the end of the day yesterday. barry, i'll start with you. one, have you seen anything like what happened yesterday, and what did you do and what should investors do at this point? >> well, we did see it back in 1987. we saw a 40% drop in 40 days, and, of course, october 19th was the heaviest buying day ever back in 1987. however, yesterday was not a buying day for us. fortunately, we had some of the
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volatility index, the essex in our portfolios, which was helpful. we were lightly invested in stocks, heavily invested in treasuries and we were sitting pretty with that and we're going to remain in that position. we think the market has a lot more volatility to go. >> so you're not adding equity provisions at these levels? >> absolutely not. it's better than it was yesterday but we're not near a reentry point. >> what about you, ron? what did you do and are you using this as an opportunity? >> we were already pretty defensively positioned in names in health care and staples areas, so we really didn't do much. we had been waiting, actually, most of this spring for some sort of crack in the kind of earnings leverage stories in the industrial and tech areas, and maybe this is the start of some of that lower prices in those areas, which we would be willing
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to add to down the road. >> barry, it was a lot of activity yesterday in etf, selected etfs that went from fully priced to basically zero in some cases very quickly. if i am an etf investor, how worried do i need to be about that kind of vulnerability to the sort of trading anomalies that we saw yesterday, and what does that say about the relative pricing stability in open end mutual funds just prior to the close of business? >> well, i think the etf side, that's been a fear that we've always had. if you have everyone heading for the exits at one time, not everyone can get out, at least not successfully. so if you have etfs, they're appropriate in certain circumstances, but i wouldn't have my whole portfolio made of them. on an open end mutual fund, the prices at the end of the day completely different animal. there may be a lot of selling that takes place at the end of
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the day which would have a force of sale the following day, but it doesn't tend to have that same impact, you know, immediately at the moment. so while etfs have been very helpful on the up side, as people buy them, they buy down on stocks. they can do the same thing on the down side. >> barry, you talked about that you had protection on volatility in your portfolio. for investors to add to that protection now is very expensive. what is the vol tatility index telling you is coming next? >> we've been at a very, very low level back which we had seen in the fall of 2007, down around 15, now up into the 30s. it does, obviously, tell us there is going to be volatility and people are trying to protect themselves from it. we think that the market is likely to go lower. what we saw with the lows yesterday are what people more or less think the prices are worth, and so as we've had a rebound, people are going to try
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to get out of the market to make sure they don't get stuck with those lower prices. so we're probably going to see, you know, a continued downturn, maybe not over the next couple days, but that's probably the trend, and so having a little volatility index is okay, but definitely not as cheap as it was a week or two ago. >> thank you, gentlemen, very much. appreciate it. so next the controversy is raging. there is a bull market in finger pointing today. was there too much technology, not enough judgment, or not enough technology, too much pseudo-judgment? coming back, we'll join you with an interview with lloyd blankfein.
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welcome back to "power lunch." america is taking the usual step in its filing of the first quarter to tell us what its exposure is to portugal, ireland, italy, greece and spain and it's saying it has exposure of $2.25 billion in the way of pigs. it has total sovereign exposure of these countries to $3 billion, but it has cvs protection for a lot of it, so the total exposure is 1.3 billion. that's also the number they have for total greed exposure, some of which is hedge. at only 193 million is sovereign
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exposure. here are the five countries and how they round out for bank of america's exposure. 1.3 billion for greece, ireland 5.1 billion. portugal, 37.1 million. italy is the most, 9.6 billion, but again, the majority of this is non-sovereign and officials telling us that bb is working to limit its exposure and risk to that region. michelle? >> they've had some of their positions, is what you're saying. they bet against them correctly? is that going to lead them into trouble with the european? >> i don't know. it strikes me if i have risk, the most efficient way to head off that risk is expose against it. >> let me ask you this question by follow-up, steve. the cv is are basically insurance contracts written against the possibility that that debt defaults, goes blooey. do we know the people who have written that insurance are in any way solvent?
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>> we don't know that, but we do know, tyler, right, that this is not a marginalist trade. when it starts working against the person who sold protection, they have to post margin against it, right? so it's not like they go from zero to paying the whole thing off. bank of america has some of that money. >> i remember this, those famous nights in september of two years ago. >> exactly. it's really interesting that they're doing this. we are waiting for other banks to come guaforward and tell us t their exposures are, too. >> thank you, i appreciate that. michelle? >> extreme volatility and uncertainty defines the markets yesterday and today we're left with a lot of questions. what was behind the extreme volatility and is it too easy to blame the machines? joining us is roger iaty, he is a market analyst. both of you are experts in
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market structure analyses. roger, did the structure fail, and if so, where? >> i think the structure did fail, albeit temporarily. it's much larger than man versus machine. it was indicative of controls that we were unaware of with respect to the speed that the risk management systems and the late ency of the risk management systems that weren't able to pick this up. it's also a potential issue around the frag mentation of the markets which created a situation where we stopped trading on the ysc but not some of the other markets. >> and that's why you saw huge fluctuations in price because they were searching for a price. they finally got it, but wow, not where it was before. gordon, weigh in on that because the devils are always in the details, certainly, but the nyc did what it thought was appropriate but the order went
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to another exchange. the controversy is whether all exchanges should have the same type of rules or not. >> well, that's part of the controversy. i don't think you can say man versus machine or one way is right or wrong. you have out wires in terms of situations that come to pass. and the regulators can't foresee all the different things that might develop. i've been down here 20 years and i've gone from a paper trading system virtually to an all electronic trading system, and in that time, it seems to me that we seem to have gotten away from a time where you're taking the time to price merchandise, finding the supply and where the buyers and the sellers are, and you sort of overregulate that in a way. for example, they say we'll hit rmp at 30 seconds, 60 seconds,
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90 seconds? why at 30 seconds? >> why, in this day and age, do you need to stop at all? >> look at some of the situations we had yesterday. we had some of these same situations back in 2008 if you look at state street as one trading example back a couple years ago where stock trading in the 50s went down into the teens and ended up in the 30s. so you're trying to say to me a company like this is worth 20% of what it was and worth 100% of that. there's got to be a little break in the action where there is some sort of catastrophic market event, whether it's real or done by some sort of problem with a generator. >> that's their business model, right? that's their business model to say, you know what, we're going to find price. but there are a lot of people who want speed, so there are competitors who say, yeah, they're going to shut it down, but we're going to execute that trade for you. so maybe it's up to the consumer
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to say, what do i want? do i want speed or do i want pigs? >> we have presence down here on the floor, but we also have an up stairs trading desk and as far as where we trade, we're agnostic. what's the best way to mitigate that where someone sells some stock down and that trade gets broken and then the guy who thinks he bought that stock ends up turning around and selling it and ends up having a position where he's short. meantime, he's the fellow that provided liquidity in the market volatility situation, so there are issues that have to be worked through here, and i'm not saying the floor is better or the machines are better. we just have to come up with something that's fair when you have this extreme volatility. >> what would be fair? what is a solution that would work, do you think? >> i think there are a couple things. i'm going to make one statement based on what gordon said and
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what you just noted, which is, what do the consumers want? i think what the consumers need to understand is the advent of speed and our ability to do things faster has created more liquidity in the markets and a situation where the cost of execution goes down. so if we reverse some of that, which everyone may be calling for now, the situation we're going to get into is not going to cost me as little as the sdur consumer, the retail investor, and do people want that? >> we're going to go back to times square and check with brian on that evolving security situation there. brian? >> we're told it could be a cooler, it could be a lunch box. the bottom line is whether it's a serious legitimate threat or not. based on what happened last saturday, they're not leaving any stone unturned. let's take a quick view for you and see the presence here. i'm being told that 47th avenue is being shut down all the way to 44th, and there are people all over the world watching right now. it's a beautiful day in times
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square in may and there is a lot of tourists here and a lot of locals here as well. there is a huge crowd no matter what's happening, so, of course, it's a hypersensitive situation. the sense of urgency among the police, they're serious -- i don't know why i use such layperson's terms, but it doesn't seem like they're freaking out. we had one person come through and say they had to go back in the building for a lunch. they weren't let in, but i'm not sure the building was being evacuated. we're being told a lunch box or a cooler, but based on last saturday, they're going to make sure it's safe before they let anyone through there. >> we've had reports that no buildings as of yet have been evacuated, and if it's moving in the direction brian suggests, that would suggest we will not have any evacuations of buildings. all right, let's go to the interview that david faber has just finished with the goldman sachs ceo lloyd blankfein at the conclusion of that company's annual meeting.
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let's take a listen. >> we're with lloyd blankfein, chairman and ceo of goldman sachs after the company's annual meeting. you mentioned introspection in answer to one of those questions today in terms of your own. i'm curious, what are you finding, what are you thinking about, what conclusions have you come to as a result of that? >> in connection with what's going on, everybody is aware of the focus on us and how we've had to respond in the conditions in which we have been responding. if there is a silver lining to this for us, it causes us to have to be thoughtful about the context in which people are saying what they're saying. in other words, we can say this particular lawsuit, but we may not think it has merit, or this
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activity, defend this activity against what somebody says is a poor activity, but we have to look at it and be honest and say somehow there is a context here in which there is a gap between the way we think about ourselves and the way the general public has thought about us. and thinks about us. and we have to respond to it. now, a lot of our attention is going to still be how we work out some of the things and some of the things that people thought and defend certain aspects of behavior, but let me tell you, it is our nature to always be self-critical and want to improve. and the silver lining here is this causes me, the entire organization and, i think, ultimately the industry, to be self-critical about how they did things with a view to take standards which we may believe to be fine, and in our case, maybe we think we're already at the highest standards we think we are, but to say where do we need to go? can we take it even higher? >> all right, give me some specifics. you and i talked only a couple weeks ago about synthetic ceo
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transactions. i asked you then whether you think they're appropriate. you gave an indication a couple weeks ago that perhaps there are things that could have been done differently. can you build on that? >> there is work we could do and we'll come up with a lot of different points. the question you had asked was about the social purpose and i explained what the purpose of cdos are in allowing people with portfolios exposure to the mortgage market to be able to reshape their portfolio in an efficient way. which is what a lot of people use derivatives for across the spectrum. i then said there may be another side, like complexity and liquidity, which might mean that notwithstanding that purpose, we may decide not to do that. that's an inquiry we would ask ourselves. >> and the one that continues. i'm trying to get -- you're introspective. have you come to any conclusions? >> i'll give you categories of things. transparency, how we show ourselves.
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i know we have been criticized in the past about not being transparent about what we show in our business mix. there is a reason why you get to the place you are. there are investors or someone who needs to know versus your own competitive angle of not wanting to expose too much. maybe we'll come out with a different conclusion with respect to various trade-offs, how we manage business selection, who we represent. it can be very frequently the case that there is a property in the world for sale and maybe five of the potential buyers might be clients of goldman sachs. how do we pick a moment? >> those are always challenges and things that you deal with in your business. that's no different, i would think, than the way you thought about those challenges in the past. >> listen. we are not going to originate some new issue that hasn't come across before, but how these things are resolved, how analytic, how much weight you give one versus the other, most
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of these are a balance of activities, and we're going to approach that, frankly, in the way we're informed in the current context of which we're operating. >> there is talk you're in formal talks with the sec. is that true? >> it must be through that are reports because i saw something in the paper. the fact is we're in a litigation with the sec, but the sec is not an ordinary litigant that someone who regulates us with whom we interact all the time on a lot of different bases in the normal course of activity. so we're interacting with them regularly. >> would there be an expectation in some way that the fraud charges will be resolved prior to going to court? >> i can't -- i can't comment on that. >> do you continue to maintain as you did vociferously when the charges were first made that you did nothing wrong, that goldman sachs did nothing wrong? >> we maintain on the facts and the law that we think we were right and acted appropriately. >> you said during the annual
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meeting as well that this period has been a strain on goldman sachs and on its clients. >> yes. >> why? >> well, when you retain goldman sachs, you're retaining us for our capability, our competence, our discretion, our ability to get things done cleanly. again, it's about the client. it puts -- you can't deny that with gold man so much in the forefront and so much in the news, people have to overcome a certain ret tense icence to poty join the public scrutiny if that's there. notwithstanding that, and i don't take this for granted, and believe me i'm forever grateful, our clients have been tremendously loyal to us. they've supported us in every way beyond my expectations. at the same time i say that, i acknowledge i regret that we're in a position where showing support for us is not being made easy for them.
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>> right. what you said during the meeting, that they were enthusiastic. can you give me any evidence in terms of what you're talking about when you say you've been shown support? >> i think our clients have, you know, stuck with us, and you'll see the proof is in the pudding. >> right. again, i know you don't like to comment quarter to quarter. i asked you this ten days ago, are you seeing any diminution in your business. you believe there is a result of the reputation issues that are at stake for goldman sachs? >> it's hard to know, and there's cyclical issues and the market today is doing things different than it was before, and we'll look back and be able to see market shares, and i know we've been shown great, great support for our clients uniformly, and i think even some of our clients are frankly doing more with us especially to show that kind of support. >> you believe they actually made some -- >> some people have had that conversation. i don't take it for granted. i appreciate it -- >> you're not going to do this again just to -- >> i would say it hasn't been
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worth it. >> you and i spoke after you came out of a very long day of hearings not that long ago. when you look back on that interaction particularly with you and senator levin, do you think there is an understanding of what you're talking about when you speak to members of congress? >> i do largely. i think when you are a generalist, a very smart generalist like a senator who has to have a sense and legislate and balance different elements, just like we were talking a few minutes ago, it's not a question of is this good or is this bad, it's how good is this versus how bad is that, what should the trade-off be? i think they are informed enough to make those kinds of judgments. they know the technicalities of the market. >> they want to acknowledge there is a certain underwriter and a market maker? because they didn't seem toward. >> no, but i think they had an intuition that this didn't feel
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right, and to some extent, maybe i was inadequate to my purpose. let me tell you, in all our businesses, we put our clients first and we support our clients. that means different things in different parts of the business. for example, in an advisory business like banking, it's obvious we have a duty and a relationship to make sure they do the right thing. if they want to go do x and we think it would be right to do y, we say, don't do x, we think you should do y. on the market making side, our duty to clients is served by us. whatever market conditions, whatever chaos prevails, using our capital to help our client accomplish what they want to accomplish, we make hundreds of thousands, maybe millions of markets a day. think of somebody going to the new york stock exchange which is another kind of market. nobody is saying, i wouldn't sell that security here. no, you should buy this and not that. client service and dedication to the client in that case is standing there and being able to provide liquidity to your client
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no matter how tough the market is. >> before we wrap up, you mentioned the market, you mentioned the nyc. have you ever seen anything like we saw yesterday in the equity market? >> it was very unusual in the market. >> have you been told, do you know? obviously, goldman has a pretty good feel for what's going on. do you have an understanding? >> nobody has told me explicitly. i've been given several theories and i have no theory. i think we're still examining those things. >> but you don't feel you even understand at this point -- stocks traded at a penny, and there's something very wrong. >> because i can't tell you doesn't mean people don't know it or it's not understandable, it's just where' been. >> high frequency trading may be blamed in part for what's going on. goldman conducts that business? >> i'm just not familiar enough with this theory. >> what about that business in
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and of itself? >> i think that business in and of itself is a good business at goldman sachs and i think it's an important liquidity generator for the market. i have no opinion because i haven't heard any connection made to it. >> finally europe. we're dealing with corporate crisis there. there's not a lot of business in europe right now when everybody is worrying about what's happening with sovereign debts and the issues with these countries. have you seeing a slowdown in europe, are you concerned about goldman's business in europe? there's 500,000 people alone in london. >> of course i'm concerned about the economy in europe, frankly, and the whole political and social environment in the european community. i'm pretty confident that the european sovereigns will do what's necessary to restore confidence. a lot of what's going on, not that dissimilar to what happened a few years ago in the market, has to do with confidence and sentiment and less to do with the actualalities of someone's
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ability to make payments. but sovereignty matters -- >> it's the most important thing. >> it's the most important thing, and i think the government in europe has the motive and the where with all to restore that confidence, and i think they will. >> business in europe is going to slow down? >> i think in general business, except for this interlude which is recent, i think business around the world is correlating with renewed optimism about growth, and that's current in europe as well as united states and asia. >> lloyd blankfein, thank you. >> thank you very much, david. and there was david faber who we bring in now from the location of the meeting. david, i assume you're there and i see you. what were your impressions? i certainly sense, and i think people who were at the table with me do, too, when you started asking questions about high-frequency trading and what went on yesterday, mr. blankfein -- let me just say he seemed a little off his pins. >> it may simply be what he
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said, tyler, which is he doesn't know or hasn't been briefed, at least, at this point given he was preparing for the annual meeting and was in the annual meeting all morning, exactly what went on. i think as much as anything, it may have been his simply not really being able to answer the question, but i can't be certain, but i would assume that is why he responded as he did. >> your overall impressions, david? >> you know, listen, being in the media course and watching him -- in the meeting and watching him deal with shareholders, and david saying he should resign. >> did he get beat up a lot? >> he did not get beat up a lot.
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there was great decorum in the room and a lot of support. when one client stood up and talked about the great support of goldman sachs since lloyd blankfein took over four years ago, and a lot of people applauded. i would say a good deal of decorum other than evelyn who started talking about her children and berated lloyd blankfein, he sort of sat there with a bemused smile on his face and accepted it. of course, mr. blankfein was reelected along with all the other directors with 95% of the vote. >> much easier than facing down congress, basically. >> yeah. yeah. i would say that is true. his performance there was certainly better, perhaps, than some believed it has been in front of members of congress. >> david, we're going to come back to you on the other side of this break and be joined by ron and tom and gary kominski to
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talk about goldman. a lot of faces around the table right here. we'll see you after this.
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as we check in on the dow industrials, let's bring back in david faber, gary kominski, ron and tom follow us as well. as gary was pointing out earlier, i can't recall a time when the ceo of goldman sachs has been so public and publicly available and present as over the past two weeks. >> i would agree with you on that, and i probably have known goldman's ceo bob rubin. that's about as far back as i go. goldman is in an unusual position. they have been the guys with the white hats and the white shoes for quite a long time on wall street and suddenly they find themselves in positions where their actions in the marketplace are being in question. it seems this is really a
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transformed business than when they were a partnership. now they're in the public marketplace, they are operating in multiple places simultaneously. and as lloyd blankfein says, he called it ag norks, -- agnostic. >> the poll they did with the private client group, which in itself was an extraordinary thing to do, i understand why they had to do that poll. but i think if you were a private client with goldman sachs and you listen to that call, you sit here today going into the weekend with more questions about your relationship with that firm than you had a week ago. i recognize they had to do the call, but i now start to wonder when they talk about the proprietary trading for their own account and how the investment side of the business which you are a client of, there are a lot of different clients,
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the institutional client, they may be only acting as a market maker. they may just be trying to do price discovery. but on the investment advisory side, you're looking to them to give you advice. i think what they feel this week is you may be trading against them. >> and they lose clients eventually. they say it hasn't hurt their business so far. >> david? >> gary, everybody knows how to deal with goldman sachs, don't they? come on. if you talk to any hedge fund manager, any public manager, they know it's part of dealing with goldman and other firms as well. >> david, i'm not talking about -- >> they know there's going to be conflict and see they may be on the other side of you. >> no, but the high level of individuals who may have the ability to work with a trust, they have the ability of goldman advising them on personal assets may not have been aware of the proprietary side of the business as it relates to the investment
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advisory side. >> but is that going to be any different at another place? >> well, there are some shops that specialize in just advising. >> not a jp morgan. >> not any of the big shops. and the common complaints you here, they fall short of being actualal gags actual allegations, if you are a hedge fund, is the prime trader trading before the order going through your system. these are the prime complaints you hear, but nobody has brought them up in these formal allegations. >> they are better than they have ever been before. has this effort been successful in the last couple weeks? >> one thing i didn't ask mr. blankfein about today was simply whether he believes he's secure in his job. at least, i didn't ask him on air, but i know that he does and expects to be there on monday when he will not voluntarily resign as evelyn davis may have asked, but there is certainly a question as to whether the
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current management of goldman sachs will be able to keep their jobs long term. either you can argue in many ways whether it's fair, but to the extent of the reputation, the firm has been hurt by certain actions that were taken or not taken, but they're fighting that battle right now and they're fighting by making themselves available to cnbc and also just trying to be more public as they can to connect, perhaps, with an audience that they don't deal with, which is, of course, the american consumer. >> can i ask one question of lloyd blankfein? no one who is asking him questions of congress had the foggiest idea of what they were talking about. let's just get that on the table. >> it has nothing to do with the sec investigation. they need to go back to the investment bank or head of this company to get back to where they were. david, gary, thank you so much. it has been a wild one this week. it has been terrifying turmoil,
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or whatever words we've been using. >> what will traders be focusing on? is it too late for some protection? we'll get on to "triple play" right after this. so, cirque du soleil becomes... ...cirque du sun life. because soleil means sun.... (gibberish) i'll take that as a yes... sooner or later, you'll know our name. sun life financial.
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time now for the "trader
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triple play." we have greg carbone, options president. when we come in, we have to see what happened in europe, right, over the weekend? le let me start with you, matthew. >> i would think so. after the wild ride we had the last week or so, i would anticipate europe being down, but i don't anticipate too much of a rally. >> what's the smartest move i can make between now and 4:00 p.m. >> i think you have to be low on s&ps. i think they'll be defensive going into this weekend. i think the markets over the course of this weekend is really going to digest that information. >> are you thinking since chart mini wasn't that much maybe we get chart maxi by monday. >> we'll need maxi. right now it's a rifle gun approach. we need a shotgun approach.
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>> dump the cash over there. ray, what do you say to my question, smartest move i can make between now and the end of trading today? >> stay flat. don't take any risks right now. let's see what happens next week. >> wow, that's pretty defensive, right? >> it's defense, defense, defense here right now. >> why is that? are you as focused on what europe is going to do because of its subsequent impact on the dollar and the commodity? >> that's correct. we've been correlated so close with equities and we see what the european market can do to our equity market. just yesterday the dollar is going to continue to rally. that continues to go down. >> how much gold do i want right now? >> i think you want a lot right now. that's the only thing that performs very well this week. it rallied all day yesterday and even today. so i would think you would want to be overweighted in gold. normally you want to have probably just a little bit in
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your portfolio. >> great stuff right there. we appreciate it. >> have a good weekend. >> it's going to be a very interesting weekend. >> oh, yeah, you've got to tune in. >> that will be it for "power lunch." we begin now with sue herrera. it is 2:00 on wall street where volatility is the name of the game. wild swings as the questions remain. what happens? where is the confidence? is your money safe? hello and welcome to "street signs." i'm simon hobbs. >> and i'm sue herrera. it was another and still is another extremely volatile day on wall street. as if the market didn't enough to worry about, times square has now been cordoned off, part of it has been evacuated because of a suspicious package. we will be following that breaking news story for you all along. right now, though, let's get to the trading floors where bob
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posani is at the nyc, we're at the nasdaq. we're down about 80 points right now. we're in the last two hours of what has been an incredible week. what's going to happen, do you think? >> the important thing is once europe closes we tend to settle down. yesterday was an outstanding exception, of course. if you take a look at the euro, we moved down about 10:30 eastern time, the euro in relation to the dollar, to new lows on the day and our stock market moved down at the same time to new lows. there's the euro drop and the dollar dropping to below $1.26 there, as you can see, then we moved back up and our market hit a high a little after 12:00 eastern time. take a look at the s&p 500, you'll see pretty much the same. we dipd down and then moved to the up side. the most important thing is what's going on with the vicks ultra all week. we were

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